The Poverty, Inc documentary showcased many methods to combat problems within developing countries, including aid organizations and clothing companies like TOMS.
As the popularity of fast fashion giants (such as H&M and Forever21) increase, people are buying more clothes and also donating clothes after one or two wears. A growing problem is what to do with recycled clothing. Without help from outside sources, a small town in India found their own innovative way to solve the problem and profit from it. In 2000, they began to recycle woolen garments into blankets for about $2 (significantly under market price). The practice blossomed into a $4 billion used clothing trade.
Unfortunately, China realized the success of woolen blanket sales and is now producing the blankets in factories–but not from recycled material. They are offering brand new blankets with a larger color selection. Those that were buying from the Indian town can now buy it brand new from Chinese manufacturers at the same price.
The article mentioned a Chinese clothe-sharing startup as a potential way to keep clothes within the recycling lifecycle without having to compete with cheaper, newer brand manufacturers. It seems like a tricky problem though–I know I would probably end up buying a “new” garment as opposed to “recycled” or “shared” if the price were about the same. I guess this is a case where economies of scale actually is a disservice to the local community
(http://www.scmp.com/business/china-business/article/2110128/china-clothes-sharing-start-ycloset-secures-us50m-new-funds)
I agree that the economics of scale makes the problem much more difficult. Those with technology and investment money are able to quickly make cheap products. Those who have little investment money and must therefore settle for more traditional techniques must either price (sometimes inferior) goods high, or must settle for little compensation for their work (and may still be undercut by mass production). The question is, what can we find for people to produce that matches their skill-set and access to machinery? I cannot answer that as I am ignorant of the skill levels and technological access found in many economically poor regions.